Climate change and sustainability are fundamental business issues in the emerging low-carbon economy. This opens up not only new opportunities for organizations to increase revenue and reduce costs, but also the need to manage a wide variety of new risks. For the Internal Audit function, identifying and understanding these risks and how they affect the organization is critical — as is Internal Audit’s role in helping to evaluate the results of climate change and sustainability initiatives and reporting when the results do not meet the company’s objectives. Accuracy in monitoring, measuring and reporting the results of climate change actions is becoming increasingly important to internal and external stakeholders. As a result, the evaluation of management’s climate change and environmental agenda and disclosures is a topic of wide-ranging discussion for the disclosure committee, the audit committee and the board of directors. Why now?A number of forces have combined to increase interest in climate change and sustainability-related issues, including: - Better public access to information, improved media coverage of issues and greater expectations of corporate transparency High-profile incidents in the workplace, including major spills, process safety incidents and human rights allegations
- Shifting consumer expectations and behavior
- Business partner expectations and competitor activities — market conditions require that companies keep up the pace in this area
- The introduction of more stringent regulations, including non-financial reporting requirements (e.g., EPA, FTC)
- Greater engagement by the investment community, including the publication and popularity of international indices (e.g., Dow Jones Sustainability Indexes)
- Employee expectations — workers increasingly say that it is important that their employer is "responsible" to society and the environment
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